Top Retail Trends for 2018: Industry Experts Share Their Predictions

In 2017, we saw a tremendous number of changes happen in the retail industry. Artificial intelligence and virtual/augmented reality were just starting to take flight in terms of marketing to customers.

Amazon bought Whole Foods, changing how we thought about grocery as a whole. Voice ordering was all people could talk about as products like Amazon Echo and Google Home were changing the way people shop.

We saw Walmart take aim at Amazon with its checkout-less stores, its offer of free two-day shipping, testing in-home grocery delivery and partner with Google to making it possible for customers to voice order. The list goes on here.

We can expect to see more of the in-store and online battle as retailers push to win over customers by meeting them where it’s most convenient and caters to their needs and expectations.

Many in the industry called 2017 a “retail apocalypse” and there were certainly strong elements of this. There were hundreds of store closings and several major bankruptcy filings as companies felt the ongoing pain of retail’s evolution. But the year ended on a high note with loads of anecdotal evidence of stronger-than-expected holiday sales; final figures will be in later this month.

Below, some industry experts provide their predictions on where retail, and B2C commerce in general, will be headed in 2018.

The Evolution of Product Discovery

In 2018, we will see an even swifter evolution in the way consumers discover new products and make purchasing decisions. Retailers and merchants will need to adjust strategies throughout the year as expectations for in-store experiences shift and consumers demand deeply personalized online shopping experiences.

Customer-generated content (CGC), such as ratings, reviews and photos, will give consumers a way to connect with fellow shoppers that may hold more influence than the traditional promotional levers of discounts and shipping offers. CGC will offer a way for shoppers to quickly transition the buying experience across channels and devices during peak points of shopping engagement. CGC’s role in product discovery and purchase decisions will be a key to success in 2018

– Jim Davidson, Director of Research, TurnTo Networks

ROPO As a Measure of Retail Influence

Retailers will begin to realize that how they have traditionally been measuring success will change. Gone are the days of looking at same-store sales or sell-through metrics to determine if a store is successful. Instead, what we will see is a shift towards understanding influence by measuring the in-store ROI of digital ads and media.

I believe we’ll hear a lot more about ROPO or “research online, purchase offline/research offline, purchase online” as a measure of influence. The good news is that the tools to measure ROPO are now more accessible to retailers than ever.

We will see a shift towards trying to better understand how social media, mobile devices, mobile payment, geolocation/mobile tracking, personalization and real-time inventory all interact with advanced analytics tools, ERP, CRM and POS systems.

Marketers are using artificial intelligence to predict things like recommended products/content, as well as identifying shoppers likely to buy/churn or need coupons. But we will need to start expanding the reach of machine learning to strategies like understanding buying channel preference and connecting the dots between all the different touchpoints and devices to make shopping easier. Think about how AI can uniquely improve all your programs and strategies – not just using it as a hammer to pound in screws.

With the iPhone 8/X and Pixel 2 bringing AR to the masses, we can start to expect more retailers jump on the bandwagon. Think Snapchat and Warby Parker or even picking up an item in the Macy’s app and virtually trying it on. There is also the potential for gamification of rewards programs using AR to “find” discounts and coupons in the real world (just like a Pokémon).

The regulations of the European Union’s General Data Protection Regulation (GDPR) are paving the way for a more two-way conversation around what a company uses to understand shoppers. Consumers have said for years they engage with brands that are more personalized to their tastes, so we need to be open and honest with how their behavior improves their shopping experience. Through transparency, potential buyers can see how data helps retailers put what they need at the front of the store instead of making them go searching in the back for it.

– Mike Hartman, Senior Director of Product Strategy, Listrak

Amazon, Walmart and Winning Over Customers

Brick-and-mortar stores will continue trying to position themselves as a more customer-friendly shopping option. Meanwhile, online retailers will keep offering deep discounts to attract and retain customers. Consumers will continue to demand free and quick shipping, as that is the new standard. Brick-and-mortar, if done right, can use this to their advantage by enhancing their buy online, pickup in store (BOPIS) offerings.

One big battle will be in online grocery, where the likes of Amazon, Walmart, Target and Kroger are all trying to find ways to win over customers in the at-home-delivery market. This will not be solved in 2018.

The most intriguing aspect to me is how voice will continue to develop. Amazon is already trying to figure out how ads can be delivered via this medium. For name brands, figuring out how they will be able to compete in this Amazon-driven environment will be critical to defining if they view the ecommerce leader as friend or foe.

Who will Amazon acquire next? From a retail standpoint, they’re making a move into the superstore-type format. This will not only help them sell more private label brands but also provide a location for BOPIS and returns, which in turn cuts shipping costs. I don’t think all the Target chatter makes sense. A store footprint the size of Kohl’s seems about right to me.

Ultimately, I see the bigger news story with Amazon being in the business and entertainment space, not just in direct-to-consumer retail. I can see something that would overlap with Amazon Web Services, such as an ecommerce platform solution. I could also see a media creation/distribution company acquisition that would make them a much stronger player in not only acquiring new Prime customers, but becoming a major over-the-top media provider.

– Greg Zakowicz, Senior Commerce Marketing Analyst, Oracle + Bronto

Adapting to Changing Customer Needs

Adapting to changing customer needs is the number 1 priority for retailers in 2018, with 77% stating it provides a competitive advantage and 53% stating they are very prepared to address it. Omnichannel retail has taught consumers to shop differently and has changed the expectations for all channels. Retailers that harness data, digital, and mobility to truly know their customers and deliver a seamless, tailored experience will thrive.

Digital capabilities and employee engagement are the second and third top priorities respectively. As retailers migrate towards digital and mobile omnichannel engagement, they must create a new layer of service design to differentiate the brand experience and offer high personalization. At the same time, they must look for opportunities to involve their employees in a meaningful way that delivers value to the retailer, the employee and the end customer.

Emerging technologies such as IoT and AI ranked low in the very high priority hierarchy for retailers, at 34% and 20% respectively. IoT is instrumental in supply chain optimization, as well as in enabling in-store customer sensing and location capabilities that provide vital behavioral data. AI has the potential to be a competitive advantage if retailers explore leveraging it in combination with the wealth of data they already possess to drive personalization in the path to purchase.

Overall, retailers report energy and enthusiasm for customer focus, yet feel unprepared for effective employee engagement, supply chain optimization, and are constantly feeling pressure from new competitors. The most fabulously conceived consumer experience can be undone without the operations to back it up, and engaged employees to deliver it. Retailers must focus on their employees and continually enhance their operations in order to keep pace with competitors.

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Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?